Tuesday, Sept. 16, 2003 | 11:18 a.m.
CARSON CITY -- Employers in Nevada may see a decrease in their workers' compensation insurance premiums starting in January.
The National Council on Compensation Insurance has reported to state Insurance Commissioner Alice Molasky-Arman that rates could be dropped an average of 16.4 percent for industrial insurance coverage.
Molasky-Arman said most businesses should benefit from basic rate reductions, although some could face increases up to 12 percent, depending on their history of workplace injuries and their costs.
Last July, premiums rose an average of 1.5 percent for workers' compensation coverage.
The national council is an independent group that evaluates the losses versus the premiums collected by insurance companies in Nevada and makes a recommendation on what the rates should be.
Deputy Commissioner John Orr said this is in contrast to California, where the rates have quadrupled in the last two years. Some employers say they have had to lay off workers because of the higher premiums.
Since 1999, 28 private workers' compensation insurance companies in California have sunk into insolvency.
Ray Bacon, executive director of the Nevada Manufacturers Association, said he expected a rate decrease but not by that much. He said it would be "dynamite for economic development as California has gone completely nuts" in the workers' compensation field.
He said rates in California are at least 40 to 50 percent higher than in Nevada -- and in some categories, 100 percent higher.
Orr said one reason rates should go down in Nevada is the safety record of employers.
In addition, he said, there have not been any "large calamities" in the past few years that would force a spike in insurance costs.
The new rates would apply to each employer on its normal anniversary rating date.
The national council is also recommending a decrease of 13.5 percent in "assigned risk rates." Employers who can't find insurance are put in this pool, where rates are higher. Last July, the average rate decrease in the assigned risk category was 10 percent.
The council is proposing to scrap the existing simplified assigned risk program with a maximum surcharge of 49 percent and replace it with a new program with a maximum surcharge of 25 percent.
Molasky-Arman said this change was proposed because of her concerns that the present program had a detrimental effect on small businesses with only one or two claims. Including this change, the proposed overall assigned risk premium level change would decrease 19.7 percent.
Molasky-Arman said that the national council's lost cost filing includes loss experience data filed from insurance companies that write industrial insurance polices in Nevada. Insurance companies providing workers' compensation coverage must subscribe to the national council and adopt the revised loss costs when they become effective. Insurers must also file their expenses.
Molasky-Arman said she intends to make a decision in the next few weeks on the recommendations of the national council that also performs similar tasks in other states.
Executives with Employers Insurance Company of Nevada, the leading provider of workers' compensation coverage in the state, said they would not comment on the projections until they have a chance to review the formal rate filing.
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